Ex Works (EXW)

Ex Works (EXW): Definition and Key Points

Ex Works (EXW) is an Incoterm used in international trade that places minimal obligations on the seller. Under EXW, the seller’s responsibility is to make the goods available at a named place (often the seller’s premises or a nearby terminal). From that point, the buyer assumes all costs, risks, and logistics for transporting the goods to their final destination.

Key takeaways:
* Seller’s obligation is limited to packaging and making goods available at the agreed location.
* Buyer bears transport costs, export/import customs formalities, insurance, and all risks once goods are made available.
* EXW is one of 11 Incoterms in the ICC’s Incoterms 2020 rules.

What EXW Requires

Seller obligations (minimum):
* Package and label the goods appropriately.
* Make the goods available at the named place for pickup.
* Provide any assistance reasonably required to obtain export licenses or documents (the buyer pays associated fees).

Buyer obligations:
* Arrange and pay for all transport from the seller’s location onward.
* Handle export clearance (unless otherwise agreed), import clearance, duties, taxes, and customs formalities.
* Arrange insurance if desired.
* Pay any terminal, loading, unloading, and destination delivery charges.
* Assume all risks of loss or damage from the moment goods are made available.

Note: A seller may agree to load the goods onto the buyer’s transport, but under EXW the seller is not obliged to do so. Even if the seller loads the goods, the buyer typically bears the risk during loading unless the contract states otherwise.

EXW vs. FOB (Free on Board)

Major differences:
* EXW: Seller’s responsibility ends when goods are made available at the named location. Buyer handles export clearance, inland transport, loading, carriage, insurance, and import formalities.
* FOB: Seller is responsible for delivering goods to the port of shipment, clearing them for export, and loading them onto the vessel. Risk typically transfers to the buyer once goods are on board the ship. FOB applies only to sea and inland waterway transport.

FOB generally reduces buyer risk and is more favorable to buyers than EXW, which places nearly all responsibility on the buyer.

Insurance and Customs under EXW

• Insurance: The buyer is responsible for insurance from the point goods are made available at the seller’s premises.
• Customs documentation: The buyer normally arranges both export and import documentation. In practice, some jurisdictions require the local (seller’s) party to complete export declarations; EXW may be impractical if local regulations prevent the buyer from handling export formalities.

Advantages and Disadvantages

Advantages:
* Lower seller cost and liability — often results in lower prices.
* Useful for buyers who want full control over logistics or who consolidate multiple suppliers.
* Can help anonymize a supplier if desired.

Disadvantages:
* Buyer assumes most risk, cost, and administrative burden.
* Requires the buyer to have reliable local representation or logistics capability in the seller’s country.
* Can be costly or impractical for buyers unfamiliar with export procedures or where local regulations restrict non-resident export filings.

When to Use EXW

EXW is suitable when:
* The buyer has strong logistics capability in the seller’s country or uses a freight forwarder who can handle export procedures.
* The seller cannot or will not perform export formalities but can make goods available for pickup.
* The buyer plans to consolidate shipments from multiple suppliers to optimize transport.

Avoid EXW when:
* The buyer lacks a local agent or experience with export procedures.
* Local law requires the seller (or a local entity) to perform export declarations.
* The buyer prefers the seller to bear export and initial transport responsibilities (consider FCA, FOB, or DAP instead).

EXW in the Context of Incoterms

Incoterms are standardized trade terms published by the International Chamber of Commerce that define delivery points, cost allocation, and risk transfer between buyer and seller. Incoterms 2020 includes 11 rules, examples of which are:
* EXW — Ex Works
* FCA — Free Carrier
* CPT — Carriage Paid To
* CIP — Carriage and Insurance Paid To
* DAP — Delivered At Place
* DPU — Delivered at Place Unloaded
* DDP — Delivered Duty Paid
* FAS, FOB, CFR, CIF — used for sea and inland waterway transport

Incoterms do not replace governing law and can be modified by contract. Parties should specify the named place, applicable Incoterm version (e.g., Incoterms 2020), and any additional responsibilities in the sales contract.

Bottom Line

EXW places the least obligation on the seller and shifts most cost, risk, and administrative work to the buyer. It can be cost-effective when the buyer has the logistics capacity to manage export and import processes, but it can be risky and impractical for buyers without local expertise or where local regulations restrict export handling. Consider alternatives like FCA or FOB when you want the seller to assume more responsibility for export and initial transport.